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Scarcely a week passes without another gale battering suppliers trying to navigate the increasingly hostile landscape that is now the energy retail market.
This past week has been no exception, with no fewer than three “whammies” threatening to squeeze margins and frustrate future business planning.
In no particular order, the first – and perhaps most worrying – was that after an unprecedented 34 companies were late making their Renewables Obligation Certificate (Roc) payments for 2017/18, as-yet-unconfirmed reports state that several have now missed the final deadline – potentially adding up to a £50 million funding gap. All eyes are now on what happens next and, most pertinently, who will be expected to plug any gap.
It’s a fair question from a sector that has only just bailed out yet another failed small player through the market’s supplier of last resort (SoLR) mechanism and levy, a fund borne by other retailers and, ultimately, their customers.
Entering the mix on Tuesday came the definitive answer as to what the price cap will be on default tariffs. At £1,137, it was just £1 higher than the proposed amount. While no surprise for an industry long reconciled to the controversial policy, its repercussions for all retailers are still unknown – prompting renewed calls for Ofgem to get this critical market intervention right, particularly on wholesale price increases, operational costs and sufficient headroom for competition.
Meanwhile, just a few days earlier a letter from the regulator had landed on suppliers’ desks reminding them about their smart meter commitments. As the great rollout continues its journey towards its 2020 deadline, Ofgem pointedly instructed suppliers to “learn lessons” from mistakes made in the advanced meter rollout, particularly around programme governance, customer engagement and interoperability.
There are a lot of pronouncements and questions around. Although resigned to the cap, the SoLR, smart meters and market volatility, suppliers who are keeping their side of the regulatory and service bargain are finding this an increasingly frustrating time in an ever tougher, unpredictable environment governed by some struggling market mechanisms.
As one Utility Week source put it, for now it seems all we can be sure of is to expect the unexpected.
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